The Baby Boomers have got the numbers all right, and with over 4 million in Australia, 2010 sees the first of them entering retirement. But the majority haven’t they got their financial numbers right for retirement, and are in for a hard slog over the next 30 or 40 years.

Even before the hammering of share and super portfolios courtesy of the GFC, the numbers don’t stack up well for Australian retirees. Research shows that already 27 per cent of over 65s in Australia have incomes below the OECD poverty threshold*, which is twice as many as the OECD average, and the second worst in the developed world behind Ireland (30.6 per cent).

The major reason is the low level of the age pension. New Zealand, for example, has a basic pension worth 80 per cent more than our age pension.

But the numbers get worse, according to the Retirement Income Report:

• Less than 1 in 10 people (8 per cent) have enough super to achieve a $40,000pa income
• People are delaying retirement by 3 to 4 years due to setbacks from the GFC
• 9 per cent super contributions are simply not enough to provide for retirement
• The weekly Age Pension for retirees 65 years or more is:
  • $142 for singles
  • $248 for couples
• Typical savings are only sufficient to fund 3 years of retirement

The real tragedy is that so many retirees are now entering a world of virtual poverty after a lifetime of hard work, and that with ever-increasing life expectancies they are facing the reality that they will outlive their savings.

If Baby Boomers haven’t provided efficiently for their retirement, they are facing a life of heavy budgeting, retirement homes, reliance on their children – who are likely just starting out on their own or with a young family of their own – and the stress of relying on inadequate pensions.

If you would like to learn more and discuss how McCarthy Group can assist you, click here.

*(The poverty threshold is defined as an income level that is half the median household income in that country).